Vietnam PMI September 2016

Vietnam: Manufacturing PMI climbs up further in September

October 3, 2016

The Nikkei manufacturing Purchasing Managers’ Index (PMI) increased from August’s 52.2 to 52.9 in September and reached a 16-month high. The result reflects a healthy increase in employment and robust expansions in output and new orders. The indicator has remained above the 50-threshold that separates expansion from contraction in business conditions since September 2013, with the exception of two months in late 2015.

September’s result reflects accelerations in production and new business, which prompted a strong rise in employment. As a consequence, backlogs of work declined despite the growing new orders. Moreover, manufacturers’ purchasing activity increased. Regarding price developments, input costs rose moderately and output prices were hiked for the first time in four months.

According to Andrew Harker at IHS Markit, “The standout number from the latest Vietnam PMI survey was the fastest rise in employment for five-and-a-half years as firms responded to sustained new order growth. Higher inventory levels were also registered, with a number of respondents attributing this to efforts to build reserves. This all suggests a level of confidence among manufacturers that output will continue to rise in the near-term at least.”

FocusEconomics Consensus Forecast panelists see investment rising 8.9% in 2016, which is unchanged from last month’s forecast. For 2017, the panel expects investment to grow 8.6%.

The industrial sector performed strongly in December but grew at a more moderated pace compared to the last three months, largely reflecting a broad-based slowdown but also partly due to a reduced base-effect.